Exciting as we are on the brink of the fourth industrial revolution. A new golden age in advancement of scientific knowledge and human progress which will empower endless new opportunities deep into our sector. Artificial intelligence (AI), or artificial thinking, is the wellspring for much of what is to come. It is essentially the science of making machines smart. The convergence of machines and intelligent data – known as the ‘industrial internet’ – will transform industry, society, economies and nations the world over, we are told. This will involve the blurring of the digital and physical world as intelligent, interconnected objects – colloquially known as the ‘internet of things’ (IoT) – will dramatically improve performance, lower operating costs and increase reliability. More fundamentally, these aligned forces will evolve how we work, live and play.

Healthcare, infrastructure and transport as well as city planning and management will all see radical evolutions.

The opportunities for commercial real estate (CRE) are vast. The sector is only at the beginning of this digitalisation which will see all property sectors at the transformed by new technological innovations – drawn from, inter alia, AI, automation, robotics, advanced manufacturing, cloud computing – while individually digitalisation will lead to sectors integrating networks and overlapping.

Confusing because while digital transformation is a dynamic catalyst to transform operating businesses and advance productivity, the consequence of these advancements is also disruption. This is visible across the real estate value chain. For example, robotics and advanced manufacturing technologies will question the viability and efficiency of traditional factories and their infrastructure. Reliance on off-shore workers in emerging markets could reverse, while autonomous vehicles will remove the need human drivers reconfiguring business models. Similarly, the collaborative economy is redefining how we work and spend as consumers which, together with other innovations, is changing CRE demand-supply dynamics and business models, across real estate development, usage, design, leasing, valuation and financing.

Elon Musk, Tesla and SpaceX founder, in an interview at the US National Governors Association at Rhode Island earlier this month, predicted that than half of production of new vehicles will be fully autonomous within a decade. “I think almost all cars produced will be autonomous in 10 years – almost all – it will be rare to find one that is not in 10 years. That’s going to be a huge transformation.” This innovation will impact supply chains, causing certain business models to reconfigure and with it real estate requirements. One obvious example in this scenario would be the end of urban car parks in smart cities.

Brokerage and leasing will likely be two of the first real estate services to be disrupted, as barriers between potential tenants and real estate owners collapse. Online platforms and marketplaces – such as those provided by Hubble, 42Floors and VTS – empowering tenants to make more informed decisions without broker intervention. “Developments in cloud computing combined with mobile and social media are resulting in cost-effective and real-time availability of property information and are enabling many leasing activities online,” wrote Deloitte in a recent report entitled Commercial real estate redefined. “Technology enhancements can further disrupt the traditional brokerage model that already obviates the need for human touch by revolutionizing data ubiquity and transparency, and by providing even more information to tenants.”

The Future of Life Institute (FLI), a non-profit research and technology activist organisation, wrote: “As capabilities in these areas and others cross the threshold from laboratory research to economically valuable technologies, a virtuous cycle takes hold whereby even small improvements in performance are worth large sums of money, prompting greater investments in research,” wrote. This tipping point is also characterised as the period where industry becomes incentivised to implement new technologies, as the speculative cost and effort is less than the resulting benefits.

Innovation through technology offers the CRE sector massively improved operational efficiencies, process automation but threats to disrupt business models and displace jobs. Technology will give and take significantly and unequally, creating a new wave of winners and losers which is still forming.

But this profound convergence evident across the globe of industry and technology – and of minds and machines – comes at a time when the reactionary push against globalisation has never held such potent political sway. We are in something of an oxymoronic period in which technological advances are accelerating human progress, bringing humanity closer together in a global community, at a time when the backlash against the unequal benefits of globalisation is most acute, causing nations to retreat. The lasting impact of these counter trends are uncertain which contrasts to expected technological trajectories, which by nature are beyond borders and almost unstoppable by world governments. Nevertheless, industry must attempt to balance both the mega and the counter trends.

We believe this period of imminent accelerated technological progress warrants close analysis and commentary. How can these new innovations be capitalised upon in our sector? And what are the intentional and unintended consequences – from the disruptions to old business models to the automation of human work?

In a new series of articles over the coming months, XploreMarkets will explore how technology is reshaping CRE – across and within the real estate value chain and investment management process. In the technology space, there is the belief that if you are not evolving and disrupting yourself, you are at risk of being disrupted. But traditional business models disrupted by new technologies are also able to redefine themselves and survive. We expect to see evidence of business model re-invention in the rapid digitalisation in the years ahead.

In this next article, we explore how the digitalisation of commercial real estate can optimize existing real estate investment management processes.